Astra Media Grp., LLC v. New York City Taxi & Limousine Comm'n

2012 NY Slip Op 32157

In the Matter of the Application ofASTRA MEDIA GROUP, LLC, Petitioner,For a Judgment Pursuant to CPLR Article 78,

v.THE NEW YORK CITY TAXI AND LIMOUSINE COMMISSION, Respondent.

Index No. 100557/11

Motion Seq. No. 001

Motion Seq. No. 002

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK

Dated: August 15, 2012

SCHLESINGER, J.:

The controversy between the parties here, involving rooftop advertising for taxicabs operating in New York City, has sparked multiple lawsuits and voluminous impassioned briefs discussing issues as wide and varied as the playing card monopoly that existed in centuries-old England. Some explanation of the various lawsuits and the somewhat extended procedural history is necessary to an understanding of the matters now pending before this Court, despite the risk of monotony.

Astra Media Group, LLC (Astra) filed the above-captioned Article 78 proceeding against The New York City Taxi and Limousine Commission (the TLC) in 2011 to challenge the denial of its request for approval of its specialized design for four-sided rooftop advertising displays. The TLC moved to dismiss the proceeding as time-barred, and Astra opposed. After the papers were submitted, both parties asked this Court to hold the matter in abeyance because the TLC was in the process of promulgating regulations governing taxicab rooftop advertising that could arguably moot the issues.

Unbeknownst to this Court at that time, in 2009, two years before this Article 78 proceeding was commenced, Astra filed a plenary action against the TLC and Clear Channel Taxi Media, LLC and its affiliates (Clear Channel), another company in the business of taxicab advertising, seeking monetary damages and related relief (Astra Media Group, LLC v Clear Channel Taxi Media, LLC, et al., Index No. 600793/09). There Astra claimed, among other things, that the TLC and Clear Channel had conspired to drive Astra out of business so that Clear Channel could increase its market share and profits in violation of the Donnelly Act (NY Gen Bus Law §340, et seq.).

Based upon Astra's assertion in the plenary action of a claim against Clear Channel under the Sherman Antitrust Act, Clear Channel removed the action to the US District Court for the Southern District of New York and then moved for summary judgment, as did the TLC. By Memorandum and Order dated December 29, 2009, US District Court Judge Naomi Reice Buchwald granted both motions for summary judgment. See, Astra Media Group, LLC v Clear Channel Taxi Media, et ai, 679 F. Supp.2d 413 (SDNY2009). On appeal, the Second Circuit upheld the dismissal of the Sherman Antitrust Act claim but remanded the state law claims to the District Court with a direction to remand those claims to the state court. 414 Fed. Appx. 334 (2nd Cir 2011).

Because the plenary action was still pending in federal court when this Article 78 proceeding was commenced in 2011, the Article 78 - standing alone - was assigned to this Court, a Medical Malpractice Trial Part that also hears special proceedings. When the plenary action was restored to the Supreme Court calendar, Astra moved under the 2011 index number to have the newly restored plenary action consolidated with the Article 78 proceeding. The Clerk's Office then referred to this Court the two defensemotions for summary judgment in the 2009 plenary action, pending the determination of the motion to consolidate.¹

When this Court held oral argument, Astra confirmed the statement in its papers that it was no longer in business. Additionally, the TLC confirmed that it had promulgated regulations effective October 24, 2011 that barred the type of four-sided taxicab rooftop advertising display that Astra had previously manufactured. The regulations also expressly limited the advertising to the two sides of the display. 35 RCNY §67-16; see also §§ 58-34 and 67-03. In support of the new rule, the TLC asserts that advertisements on the front and back of a rooftop display distract the drivers in front and behind the taxi and are unsafe, while advertisements limited to the two long sides of the display sufficiently serve the advertiser's purpose without creating a hazard. While Astra disagrees with the claimed rationale behind the new regulation and also asserts that it is entitled to an exception to the rule, it does not dispute that the TLC followed all proper procedures when promulgating the regulations or otherwise challenge the regulations on their face.

In light of these developments, the Court at oral argument asked Astra and the TLC to supplement their briefs to address whether the Article 78 proceeding should be dismissed as moot. Astra argued that its petition was not moot because it might some day re-enter the taxicab advertising market and because the new regulations give the TLC discretion to approve Astra's four-sided design. The TLC, in contrast, asserts thatthe regulations leave no room for discretion and render the Article 78 proceeding moot, as well as time-barred. The TLC urges this Court to dismiss the Article 78 and deny the motion to consolidate this proceeding with the plenary action, which is primarily a business dispute between Astra and Clear Channel. A determination of the mootness issue revolves around the facts of this case and the terms of the recently promulgated regulations.

Background Facts

From 2001 until some time last year, Astra Media was engaged in the business of manufacturing and selling rooftop advertising displays for taxicabs in New York and other cities. While its displays offered both static and digital options, Astra's signature design, which it patented, was the Taxi Sponsoring System (TSS) that displayed advertisements on all four sides; i.e., on the two long rectangular sides of the rooftop display as seen on New York taxicabs today, as well as on the shorter front and back triangular sides of the display.

Until it promulgated the new regulations in 2011, the TLC had only limited regulations governing taxicab advertising and essentially required only that any design be approved by the TLC. The TLC typically confirmed its approval of a particular design by a contract in the first instance and then by letter for renewals approximately every two years; in 2007 the TLC changed its practice to require a written Memorandum of Understanding (MOU), as discussed more fully below.

Astra obtained its initial approval from the TLC by contract dated September 16, 2004 (Petition, Exh 2). While Astra asserts that the approval was for its four-sided design based on the successful completion of a pilot project that included drawings andsafety tests, the contract does not explicitly reference the display of advertisements on all four sides of the rooftop unit.

By having advertisements on all four sides of its display, Astra was able to generate greater advertising revenues and thereby persuade more taxi owners to use its display by paying those owners greater fees. With increased profits, Astra in 2006 expanded its business from manufacturing to include the installation and servicing of rooftop displays. By letter dated July 26, 2006, the TLC approved Astra's continued use of its rooftop advertising unit, again without describing the display as four-sided. Significantly for this proceeding, the TLC expressly stated in its letter that the "approval is contingent upon the Taxi Sponsoring System's continual compliance with all TLC equipment specifications and regulations, including any future amendment of our regulations." (Exh 4).

About a year later, by letter dated July 5, 2007, the TLC advised Astra that it was adopting a new procedure requiring that all rooftop advertisers enter into a Memorandum of Understanding (MOU) so that the TLC would "have uniform approval requirements with each of the rooftop advertisers." (Exh 5). Soon thereafter, by letter dated August 29, 2007, the TLC advised Astra that its rooftop displays would be removed from all taxicabs unless Astra signed the new MOU to be effective September 1, 2007 (Exh 7). Most significantly, the new MOU revoked Astra's existing approval, expressly banned four-sided displays, and limited all future approvals to two-sided displays, stating in relevant part that:

The rooftop device shall be two-sided, each side rectangular in shape, and display advertising material to the sides of the vehicle, and not display advertising material to the front and back of the vehicle.

Although Astra claims that it negotiated a grandfathering provision allowing it to continue using its four-sided displays through August 31, 2008, Astra did sign the MOU on October 5, 2007 agreeing to use only two-sided displays thereafter (Exh 8, ¶1.3). The MOU also indicated that the TLC was in the process of promulgating regulations governing rooftop advertising displays. Then, by letter dated February 26, 2008, the TLC notified Astra that it had concluded that Astra was in violation of the October 2007 MOU due to its use of a four-sided static display, which was not the display that the TLC had approved (Exh 9). The TLC in its letter threatened Astra with termination of the MOU unless the alleged violation was corrected within 21 days.

In response, on March 31, 2008, the parties executed a new MOU...